Mitsui Chemicals to terminate EG production at Ichihara Works site; start 1-hexene plant

07-Feb-09

Japan's Mitsui Chemicals Inc. (MCI) has announced certain operational changes in a bid to improve the value of its ethylene products manufactured at Ichihara Works for competing with ethane-based ethylene products produced in the Middle East. Expecting a low level domestic ethylene glycol (EG) demand due to large supplies coming from newly established plants in the Middle East and Asia, MCI will terminate EG production at its Ichihara Works EOG Plant (EO production volume: 119,000 tpa) in November 2009. Accordingly, the 80,000 tpa of ethylene used at the Ichihara Works EOG Plant will be diverted to production of value-added products following closure of the production facility. MCI has announced construction of a new 30,000 tpa 1-hexene plant at Ichihara Works with the total investment of 7.5 bln Yen. The new plant expected to start operations by December 2010 will source 40,000 tpa of the ethylene surplus of the terminated EOG Plant. With the operation of the new plant, MCI will supply 1-hexene to Prime Polymer - a joint venture between MCI and Idemitsu Kosan Co., Ltd. - cutting outgoing costs within the group, as well as supporting stable production of EVOLUETM (metallocene linear low-density polyethylene) to support business of Prime Polymer. Surplus production will be sold to external companies. Currently, all 1-hexene used in their production is purchased from external suppliers. In addition, 1-hexene - mainly used as co-monomer of HAO-LLDPE* and HDPE (High-density polyethylene) - has a globally consumption of approximately 650,000 tpa with a predicted growth rate of 6 to 7% per annum. However, MCI will continue supplying EO which has a stable market demand as a surfactant and which cannot be readily supplied from Middle East sources due to difficulty in transport. Further, MCI's EG and EO production at its Osaka Works facility will not be affected. At the Osaka EOG Plant, it has a production ratio of EO is high at 65% and efforts are being made to improve the ratio and intensify operation stability.